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URL:  http://boards.fool.com/it-looks-like-you-are-heavy-into-mid-cap-and-small-20291104.aspx

Subject:  Re: 401k Diversity Date:  2/8/2004  8:12 PM
Author:  telegraph Number:  39045 of 74783

It looks like you are heavy into mid-cap and small cap, with half or more of your portfolio there. While they have outperformed in the past few years, that is no indication of what they will do in the future.

I suggest that YOU need to get up to speed on asset allocation to feel comfy with your choices. YOu'll find 30 answers from 30 people as to the 'ideal' allocation, and that will vary as the age of the person varies.

SOme of the diversification also deals with your risk tolerance (your willingness to tolerate high volatity - price swings)

Right now, with mid and small caps, they ARE highly volatile....way up to way down. Those sectors with high returns also expose you to higher risks and higher year to year volatility.

I highly recommend you get a copy of William Bernstein's book, The FOur Pillars of Investing, which you can buy for 15-20 bucks used on the web (it is recent book), and digest it.

Also, if you need even more than that, get a recent copy of Roger Gibson's Asset Allocation (pub date after 2000), also available used for 20 bucks or so.

Then you will be in a position of deciding for yourself.

Much depends upon what other assets you might hold outside your 401K, real estate equity,etc, and how well you will sleep at night if your stocks go down 30% one month.....

t.
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